Black T-shirts, bean bags and pizzas are not innovation…
Time to get serious about innovation
The stark news is Australia ranks 17th in the world on research outputs according to the Global Innovation Index and our ‘innovation efficiency’ is even worse at 72. In starting new businesses we are 8th out of 38 OECD countries.
But very few of these start-ups create permanent jobs or long term economic and social benefits. Almost 97% exit or fail to grow.
While the handful of Australian innovation success stories - Atlassian and WiFi - is running a bit thin; if we don’t like the waves of global competitive change washing over our treasured rocks of profitability, then we’ll like the tsunami of change from millennials’ economic dominance over the next 10 years even less.
It’s time for a sense of urgency
There’s enough evidence across industries that platforms are burning. Think products commoditising, margin erosion, slow to no growth and customer dissatisfaction. But Australian companies, with some exceptions, haven’t yet felt the pinch. We need to see the ‘disruptive’ changes right in front of us as well as those still on the horizon … and move! Disruption is not instant – it is a slow moving and predictable1.
Our lack of urgency to sense change and execute is compounded by Australia’s almost 26 years of continuous economic expansion and ‘she’ll be right’ approach to innovation.
But in every category, that’s changing – and fast.
Millennials (18 – 34 year olds) are the largest global demographic group, with the greatest source of income, spending and wealth creation. They dominate employment globally, and will make up 42% of the workforce in Australia in 2020 and 75% in the USA by 20252. Their spending power is estimated at US$10 trillion globally3. What they need, what they will be buying, and want to do for work4 is why we need to change our market frame of reference today and innovate.
Strategic, Disciplined and Faster
Strategic and disciplined innovation portfolios that balance the current solutions that protect and grow the core business are the answer. We need to make the long term big bets that will be transformational. We don’t lack for ideas, so much as deep strategic intent and the discipline to move ideas to execution.
The world’s best innovators make innovation central to their growth and corporate strategy. They don’t silo. Everyone is trained for innovation capability, with skills, processes and tools. There’s discipline and a managed scaled pipeline with rapid prototyping to launch and scale. Deployment is a constant cycle of improvement. Progress not perfection. While we admire Google, Facebook and Tesla, they were built to move fast and most of us aren’t. It’s a cultural and controls challenge with executive participation, as well as a skills and process view.
It’s not enough to stand up a handful of pizza teams with monthly executive check-ins. We need integrated agile approaches with waterfall management - because that’s where the rubber meets the road. We have to move fast and execute, bring the business with us and manage the metrics that get us to execution faster. The world’s best innovators are prioritising speed to value and constant beta. Good enough IS enough. Then launch and make it better.
Finally we need formalised and industry specific ecosystems that drive supportive and co-dependent innovation capability. The depth of skills that make up real capability is still missing. As UTS Business School Dean Professor Roy Green says5 to turn knowledge assets into economic and social value needs collaborative ecosystems of research and education institutions, businesses and investors, governments and local communities.
The five essential actions to make innovation successful are to build a portfolio innovation strategy across the entire value chain; a disciplined strategic approach to innovation; speed to value; internal capability to make innovation everyone’s job; and use ecosystems to constantly sense the market and see what’s on the edge, what change is coming and what threats we need to be ready for.
Deloitte Innovation Strategy National Lead Partner Andy Bateman, formerly CEO Interbrand NYC and The Leading Edge global consultancy, and Director of customer segment marketing at Telstra will be speaking at the AFR Innovation Summit 19-20 September Sofitel Sydney. This article was originally published in The Australian Financial Review on 19 September 2017.
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By Cindy Hook, September 18, 2017
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Published: September 2017
1. Beyond Fintech: A pragmatic assessment of disruptive potential in financial services https://www2.deloitte.com/au/en/pages/media-releases/articles/new-status-quo-financial-services-deloitte-world-economic-forum-230817.html
2. MILLENNIALS, MOBILES AND MONEY, THE FORCES REINVENTING FINANCIAL SERVICES – Telstra Global - https://www.telstraglobal.com/millennials/assets/gated-content-millennials-mobiles-money.pdf
4. Deloitte Millennial Survey - 2017 https://www2.deloitte.com/au/en/pages/about-deloitte/articles/millennial-survey-2017.html
5. Imagine Sydney – Create – Embracing an innovation mindset https://www2.deloitte.com/au/en/pages/future-of-cities/articles/imagine-sydney-create.html